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February 13, 2017 | Inflation Expectations Rise, Spending Projections Decline

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Every month the Federal Reserve Bank of New York does a survey of consumer expectations: Inflation, spending, earning, and jobs.

The January 2017 report came out today.

Amusingly, the Fed indirectly relies on consumer confidence numbers to gage spending projections but does not rely on its own survey of consumer-stated projections.

Inflation Expectations

inflation-expectations-2017-01

Consumer Spending Projections

spending-projections-2017-01

The first chart is from the FRBNY. I created the second chart from a data download, as the Fed does not produce the chart directly.

It’s interesting, but likely meaningless, that inflation expectations are on the rise. I suspect this is due to media yapping about inflation under Trump.

CPI inflation expectations are all but useless. However, asset price expectations do influence speculation.

The other interesting thing is how the Fed clings to consumer confidence numbers as a measure of consumer spending projections instead of its own survey of household spending projections.

Finally, note how spending projections at the median and low-end drop, but at the high end have risen. Is this another Trump-effect due to a rising stock market?

Regardless, there is no sign of recovery in spending at the median- and bottom-end. People are broke.

Mike “Mish” Shedlock

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February 13th, 2017

Posted In: Mish Talk

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